USD steadies on vaccine roll-out, low Treasury yields

London

THE US dollar steadied in the European session, after hitting its lowest in nearly seven weeks during the Asian session, helped by optimism about the pace of vaccine rollout in Europe and US Treasury yields remaining below their March spikes.

The dollar has fallen so far in April as US bond yields retreated from the 14-month highs touched last month. The moves are a reverse of what happened in the first quarter of the year, when the dollar strengthened as US Treasury yields rose, offering higher returns on the greenback.

At 1158 GMT, the dollar index was flat on the day at 91.043, after hitting a low of 90.877 during the Asian session.

The euro was up 0.2 per cent at US$1.2056 - its highest in nearly seven weeks - after having passed the key US$1.20 in the previous session.

Commerzbank strategist You-Na Park-Heger wrote in a note to clients that the recent fall in the dollar is due to the US Federal Reserve reassuring the market that it will not end its monetary stimulus anytime soon, while an improving vaccine situation in Europe is supporting the euro. But she said that the situation could rapidly change.

Some analysts said the support for the euro likely came from the announcement that the European Union has secured an additional 100 million doses of Covid-19 vaccine by BioNTech and Pfizer.

Global markets turned more cautious during the session, with Wall Street futures slipping as investors turned to results from Netflix and other major technology-related companies this week to sustain the positive start to the earnings season.

Versus the yen, the dollar broke the 108 level overnight, before reversing course, up 0.2 per cent on the day at 108.410.

The Australian dollar strengthened to a one-month high of 0.7816, helped by minutes from the Reserve Bank of Australia's April meeting, which showed the central bank expects a faster rebound from the pandemic. At 1202 GMT it was at 0.7778, up 0.3 per cent on the day.

The New Zealand dollar was up 0.3 per cent at 0.72005.

Oil prices edged higher on April 19, supported by a weaker US dollar, but gains were capped by concerns about the impact on demand from rising coronavirus cases in India.

The commodity-linked Norwegian crown hit its strongest since 2018 versus the dollar, and also reached its strongest since January 2020 versus the euro. REUTERS